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Oh the memories, i took a bath during the tiger torso farse. The 40 to 1 rs left me a broken and discouraged man. I walked away for about a year after that one. i was suprised to see a board here still.
Great site! lol, Proculus was quite the braggart...
You may want to consult the Gibbon-o-matic at http://www.his.com/cgi-bin/fortune.gibbon rather than wading through the whole thing.
I really should read Gibbon again. It's been a long time.
Total Assets 25,191,000
Total Liabilities 21,146,000
Net Tangible Assets ($11,397,000)
HUH?
Probably trading as high as it is because they evidently retired or converted the preferred last quarter. And because they have a VERY small float.
There's probably more. But I'm too lazy to read the Ks and Qs for the last couple of years.
Decline and Fall of the Roman Empire
A correspondent who wishes to remain anonymous writes:
One can say of Gibbon what Mark Twain said of whiskey: "Too much of anything is too much but too much whiskey is just right."
I usually have a half dozen or more books underway at any time but I laid them all aside and was able to absorb the panoramic effect which is realized from a continuous and relatively short reading. I now have an historical framework of 14 centuries within which to put pieces which have for years laid neglected in the muck which constitutes what is left of my memory.
The effect of a continuous reading of Gibbon is dazzling but you may have to postpone that for retirement or a lucky shipwreck.
I read the Penguin edition which has a superb introduction. It was an intellectual feast. Gibbon's Memoirs are worth the attention of any reader of the history but I would suggest reading it after finishing the history. The footnotes were rich in interesting detail and the frequent references to Montesquieu caused me to inspect a copy of "The Spirit of the Laws" when I stumbled across it in a bookstore.
I am now half way through it and the background acquired from reading Gibbon brings it to life. It was relied on by Madison (Federalist No. 47) and is of interest for its historic detail and importance in the history of political (including ours) ideas.
It was first translated into English in 1750 but a new translation, Cambridge University Press, 1989, 1995 is the choice for the modern reader. It is well edited and richly repays the reader.
To me, Montesquieu has been a name only and has been badly neglected. I would hope that the new translation would make him accessible to a larger reading audience.
"Trajan was ambitious of fame; and as long as mankind shall continue to bestow more liberal applause on their destroyers than on their benefactors, the thirst of military glory will ever be the vice of the most exalted characters."
http://www.his.com/~z/gibbon.html
Doesn't look like this law firm responds to emails and I don't play phone tag!
Curiosity killed the cat!
He who knows most, talks least.
Mike Gritsch
http://proverb.taiwanonline.org/display.php?recent=true
Super! Take a look at this one and tell me what's wrong with their financials:
http://finance.yahoo.com/q/bs?s=CCE
And why does it trade so high relative to its real net tangible book value per share?
"Tact is the ability to say nice doggie, until you can find a big rock."
-- Kirk Roberts
A word is not a crystal, transparent and unchanged; it is the skin of a living thought, and may vary greatly in color and content according to the circumstances and the time in which it is used.
-- Oliver Wendall Holmes
http://proverb.taiwanonline.org/display.php?recent=true
LoL! It's also possible that there just are a whole lot of them that have been intentionally set up to fail, too. The pickens are pretty easy. :-/
Let's say that many of the companies I watch end up as worthless shells.
I believe that IFTA has a special spot within the multitude of Janice's knowledge. She has a long history with rooting out the company's connections to fraudulent activity. Consequently she does have interests (& curiousity like most of us) in what continues to transpire with this company and the shares that are still being traded.
I have no knowledge of her other interests. Except possibly she may have a focus on you personally.
Janice Shell sure watches lots of Shells doesn't she?
Janice, who then would be doing the trading and what would be some reasons for it to occur? tia. Obviously, we are still talking very LITTLE money being exchanged when high volume activity happens.
Janice, I lost VERY little money on IFTA compared with most; I was just looking for one last quick P&D, which never happened. I can not begin to believe how much so many in our lawsuit chose to risk on such a gamble. I always figured Dan to be a used car salesman that was not to be trusted. I just never figured on a 200 to 1 R/S occurring the way it did. My attitude is you win some; you lose some. I just lost some gambling money; that's all. HOWEVER, some unfortunate shareholders bet their farms on Hoyng and deserved better treatment. And I've always had this thing about fighting for the underdogs of life.
That said; I live by a few mottos. One which is: Nothing ventured, nothing gained.
You have faith in the founder of Stockpatrol who also was indicted by the SEC. I respect where he is coming from as well. People make mistakes. I don't hold fault against Martha Stewart, either. I know a few others that have had run ins with the SEC and know they learned a great deal from the experience. Of more interest to me is Acs's activities directed at fighting market corruption. I'm just on the sidelines right now, determining if such actions are actually the makings of a river which is flowing in the direction I care to go. Further investment opportunity is not part of my plan in this regard.
No.
I have no idea and have not been able to figure out how/why this stock is still being traded. Could it possibly be directed by the bankruptcy trustee?
Any shell can and probably will trade, as long as the authorities don't pull its registration. See the case of MTEI. It went out of business in August 1998, and was later sued by the SEC. But the shell is still registered, and it still occasionally trades.
My God. You fell for the blandishments of one sleazy OTCBB player, Dan Hoyng. Are you planning to do that all over again?
If you haven't understood this yet, our Sandy is a stock promoter, and he's being sued by the SEC for that:
Julie K. Lutz (Colo. Attorney Reg. No. 77246)
Tracy A. Tirey (Tex. Attorney Reg. No. 20076600)
Securities and Exchange Commission
1801 California Street, Suite 1500
Denver, Colorado 80202
Telephone No.: (303) 844-1000
Facsimile: (303) 844-1068
Attorneys for Plaintiff
LOCAL COUNSEL:
Greg Addington (Nev. Attorney Reg. No. 6875)
United States Attorney's Office
100 West Liberty St., Suite 600
Reno, Nevada 89510
Telephone No.: (775) 784-5438
Facsimile: (775) 784-518
Associate Resident Counsel
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEVADA
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
v.
Gabor S. Acs and Penny King Holdings, Inc.
Defendants.
--------------------------------------------------------------------------------
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CV- _________
COMPLAINT
Plaintiff Securities and Exchange Commission ("Commission"), for its Complaint alleges as follows:
I. SUMMARY
1. Between August 2001 and June 2002, promoter Gabor S. Acs ("Acs") and his alter ego entity, Penny King Holdings Corp. ("Penny King"), in press releases and messages posted on Internet websites, publicized the stocks of two publicly traded companies with which they claimed to have substantial business dealings: Eknowledge Group, Inc. ("Eknowledge") and Quintek Technologies, Inc. ("Quintek"). Both the releases and two Internet websites maintained by Acs contained false and misleading statements, primarily concerning the financial prospects of the two companies. Acs knew, or was reckless in not knowing, that the statements he disseminated concerning Eknowledge and Quintek were false and misleading. In one of the press releases, and on the website, Acs also failed to disclose compensation he received from Eknowledge and Quintek in exchange for his touting services. Acs realized profits of $40,168 by selling Quintek stock shortly after the issuance of certain of the false releases.
2. The Commission brings this action pursuant to the following authorities conferred upon it: (i) Section 20(d) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. § 77t] and Section 21(d)(3) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. § 78u(d)] for civil money penalties; (ii) Section 20(b) of the Exchange Act [15 U.S.C. § 77t] and Section 21(d)(1) of the Exchange Act [15 U.S.C. § 78u(d)] for an order permanently restraining and enjoining Defendants and granting other equitable relief; (iii) Section 20(g) of the Securities Act [15 U.S.C. §§ 77t(g)] and Section 21(d)(6) of the Exchange Act [15 U.S.C. § 78u(d)(6)] for a penny stock bar.
3. Against Penny King, the Commission seeks a permanent injunction, disgorgement (including prejudgment interest), and third tier civil money penalties for violations of Section 10(b) of the Exchange Act [15 U.S.C. §§ 78j(b) and 78m(a)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
4. Against Acs, the Commission seeks a permanent injunction, disgorgement (including prejudgment interest), third tier civil money penalties, and a penny stock bar for violations of Section 17(b) of the Securities Act [15 U.S.C. § 77q(b)] and Sections 10(b) of the Exchange Act and Rule 10b-5 thereunder [17 C.F.R. §§ 240.10b-5].
II. JURISDICTION AND VENUE
5. This Court has jurisdiction over this action pursuant to Section 22(a) of the Securities Act [15 U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa]. In connection with the transactions, acts, practices, and courses of business described in this Complaint, each of the Defendants, directly and indirectly, has made use of the means or instrumentalities of interstate commerce, of the mails, and/or of the means and instruments of transportation or communication in interstate commerce.
6. Venue lies in this Court pursuant to Section 22(a) of the Securities Act and Section 27 of the Exchange Act because the Defendants currently reside in or transact business from this judicial district.
III. THE DEFENDANTS
7. Gabor S. Acs, age 46, is a Canadian citizen currently residing in Reno, Nevada. In press releases and two Internet websites, www.maxpages.com/thepennyking and www.thepennyking.com, Acs has stated that he makes substantial investments in microcap companies and is a global "financier" who advises venture capitalists and operates an offshore bank in an undisclosed location. In 1982, and again in 1993, Acs filed for personal bankruptcy under Chapter 7 of the U.S. Bankruptcy Code. Acs has not been affiliated with any regulated entity or publicly held company and has no disciplinary history. Acs' current employment is unknown.
8. Penny King Holdings Corp. is a Delaware corporation wholly owned and controlled by Acs, which purports to be an "investment holding company." Penny King has filed Schedules 13G with the Commission reporting ownership of 7% of the outstanding shares of Quintek, and 9% of the shares of Eknowledge.
IV. RELATED PARTIES
9. Eknowledge Group, Inc. is a Nevada corporation located in Corona, California. The company is in the business of providing educational training courses over the Internet and through other media sources. Eknowledge stock is registered with the Commission pursuant to Section 12(g) of the Exchange Act and is quoted on the OTC Bulletin Board (a quotation service operated by the NASD). As of June 30, 2002, Eknowledge had 37,271,887 shares of common stock issued and outstanding. Eknowledge stock currently is trading in the $.40 range.
10. Quintek Technologies, Inc. is a California corporation located in Camarillo, California. The company is in the business of developing, manufacturing, and distributing data storage system components. Stock of Quintek is registered with the Commission pursuant to Section 12(g) of the Exchange Act, and is quoted on the OTC Bulletin Board. As of February 12, 2002, there were 36,522,546 shares of its common stock issued and outstanding.
11. The Free and Clear Foundations of America, Inc. ("FCFA") is a District of Columbia non-profit corporation wholly owned and controlled by Acs. FCFA purports to be dedicated to educating individuals and governments about economic matters. Press releases identify Acs as the "founder" of FCFA, which purportedly owns 50% of Penny King's stock.
V. FACTS
A. Press Releases And Internet Websites
12. Between January and May 2002, Acs wrote, edited, and approved six press releases concerning Quintek, Eknowledge or both companies. Three of the releases concerned Eknowledge only, two releases concerned Quintek only, and one of the releases concerned both Eknowledge and Quintek. The releases were disseminated by Penny King and/or the touted issuers through PR Newswire and Business Wire, and were posted on Quintek's and Eknowledge's respective corporate Internet websites. Further, between at least March and August 2002, Acs created and maintained two Internet websites that directly or indirectly contained false statements about his financial experience (see discussion below). Acs' websites included links both to Quintek's corporate website, which contained certain false and misleading Quintek press releases written by Acs, as well as links to three false and misleading press releases issued by Quintek or Eknowledge that were posted on an Internet website maintained by Yahoo!
B. False And Misleading Statements
13. On March 20, 2002 Quintek issued a press release that was written by Acs. The release represented that that Quintek had received a $10 million order for its data storage system components from a privately held Hungarian company, and that Penny King would provide financing to the Hungarian company through a "$15 million revolving credit facility." These statements were false and misleading. The Hungarian company had not placed any order with Quintek, and Acs, who acted as an intermediary in the proposed transaction, knew that the Hungarian company could not place such an order without obtaining financing from Penny King, which lacked the ability to provide such financing.
14. Acs wrote three press releases dated January 2, January 22 and March 11, 2002 relating to an agreement under which Penny King was to acquire 3,000,000 shares of Eknowledge common voting stock in a "private transaction" valued at $1.5 million. These releases were false and misleading in that they implied that the proceeds of these purported sales would be used to fund Eknowledge's operations. In fact, the stock sales agreement was between Penny King and the then president of Eknowledge, and did not provide any operating capital to Eknowledge.
15. Two of the press releases described in paragraph 14 concerning Penny King's purported investment in Eknowledge referred to an agreement under which Eknowledge would provide unspecified "development services" to FCFA. The releases projected that FCFA's payment for services under this agreement would enable Eknowledge to achieve annual revenues of $5 million for ten years, or $50 million in total. These statements were false and misleading because they lacked any reasonable basis, in that FCFA had no significant business activities, assets or revenues that could fund the payments under its purported agreement with Eknowledge.
16. A May 14, 2002 press release written by Acs and issued by Penny King stated that a subsidiary of Penny King had "proposed" merging Quintek and Eknowledge. The release contained contact information for both companies, thereby implying that they endorsed the merger transaction. Contrary to these representations, Acs issued the release without the knowledge or authorization of Quintek and Eknowledge. Indeed, at the time the press release was issued, Quintek and Eknowledge had decided not to pursue a business combination between the companies.
17. Four of the six releases created and/or disseminated by Acs, and Acs' websites, stated that Penny King was currently "facilitat[ing]" between $200 million and $2 billion in "capital investments" to 50 different companies located worldwide. All six of the releases prepared and disseminated by Acs, and Acs' websites, further stated that Acs had 21 or 22 years of experience in the "finance . . . venture capital and world financial markets" and that Acs, through Penny King, was providing significant financing to Eknowledge and the Hungarian company that had purportedly agreed to purchase Quintek's products. These and similar statements were false and misleading because Acs and Penny King at all times lacked any valuable unencumbered assets, did not possess, or have access to, the investment capital described in the public statements, and have never provided financing, directly or indirectly, to any company. The statements were also misleading in that they failed to disclose that Acs' financial experience includes two personal bankruptcies.
18. Acs knew, or was reckless in not knowing, that the above-described statements in the six press releases that he drafted, approved and/or disseminated and on the two Internet websites he created and published were false and misleading.
C. Undisclosed Compensation
19. Quintek and Eknowledge both entered into agreements with Acs or Penny King for touting services. In August 2001, Quintek entered into a written agreement under which it agreed to compensate Penny King for, among other things, Penny King's provisions of "company information to investors and financial institutions." Between August 2001 and March 2002, Quintek transferred 129,000 shares of its common stock, and paid $5,000 in cash, to Penny King pursuant to this agreement. Eknowledge entered into an oral agreement in December 2001 to compensate Acs in connection with one or more contemplated releases. Eknowledge paid Acs $5,000 in cash in January 2002 pursuant to this agreement.
20. Between August 2001 and June 2002, Acs posted at least 25 messages on Internet websites dedicated to investors, including Investors Hub and Raging Bull, touting the stocks of Quintek or Eknowledge. These messages contained apparently truthful statements concerning, among other things, publicly reported corporate developments and the contents of Acs' conversations with members of management. However, the messages did not disclose the payments by Quintek and Eknowledge to compensate Acs or Penny King for their touting of Quintek and Eknowledge.
21. The May 14, 2002 release written by Acs and disseminated by Penny King, touted Quintek and/or Eknowledge, but failed to disclose these compensation agreements.
D. Market Reaction And Sale Of Stock
22. Following issuance of the six press releases, the price and volume of Quintek and Eknowledge stock increased dramatically. On the day after the March 20, 2002 release, the closing price of Quintek stock increased by 100%, from $.18 to $.36 per share, and reported volume increased by 804%, from 216,700 to 1,742,100 shares. Following the January 8 and March 20, 2002 releases drafted by Acs and disseminated by Quintek, the closing price of Quintek stock increased by an average of 81% and reported volume increased by an average of 512%. The three press releases disseminated by Eknowledge and Penny King on January 2, 2002, January 22, 2002 and March 11, 2002 were followed by an increase in the closing price of Eknowledge stock of between 20% and 144%, averaging 65%, and reported volume of the stock increased by between 163% and 6,801%, averaging 2,471%.
23. On April 10 and 11, 2002, Acs sold 105,000 shares of Quintek stock at between $.40 and $.43 per share, thereby realizing profits of approximately $40,168.
FIRST CLAIM FOR RELIEF
(VIOLATIONS BY DEFENDANTS OF SECTION 17(b) OF THE
SECURITIES ACT)
24. Paragraphs 1 through 23 are hereby realleged and incorporated by reference.
25. Defendants Acs and Penny King, through the use of the means or instruments of transportation or communication in interstate commerce or by use of the mails, published and circulated articles and communications that, though not purporting to offer securities for sale, described certain securities.
26. Defendants Acs and Penny King, directly and indirectly, received and were to receive consideration for such activities from the issuers of these securities and did not fully disclose the past or future receipt of such consideration and the amount thereof in violation of Section 17(b) of the Securities Act [15 U.S.C. § 77q(b)].
27. By reason of the foregoing, Acs and Penny King have violated, and unless enjoined will continue to violate, Section 17(b) of the Securities Act.
SECOND CLAIM FOR RELIEF
(VIOLATIONS BY DEFENDANTS OF SECTION 10(b) OF THE
EXCHANGE ACT AND RULE 10b-5 THEREUNDER)
28. Paragraphs 1 through 23 are hereby realleged and incorporated by reference.
29. Defendants Acs and Penny King, with scienter, in connection with the purchase or sale of securities, by the use of means or instrumentalities of interstate commerce or of the mails, directly or indirectly: (a) employed devices, schemes or artifices to defraud; (b) made untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or (c) engaged in acts, practices or courses of business which operated or would operate as a fraud or deceit upon purchasers of securities in violation of Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5 [17 C.F.R. §240.10b-5] thereunder.
30. By reason of the foregoing, Defendants have violated, and unless restrained and enjoined will continue to violate, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that the Court:
I.
Find that the defendants and each of them committed the violations alleged herein.
II.
Enter an injunction, in a form consistent with Rule 65(d) of the Federal Rules of Civil Procedure, permanently restraining and enjoining Penny King from violating Section 17(b) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
III.
Enter an injunction, in a form consistent with Rule 65(d) of the Federal Rules of Civil Procedure, enjoining Acs from violating Section 17(b) of the Securities Act and Section 10(b) of the Exchange Act and Rules 10b-5 thereunder.
IV.
Order Penny King to pay a civil penalty pursuant to Section 20(d) of the Securities Act and Section 21 of the Exchange Act in an amount to be determined by the Court.
V.
Order Acs to pay a civil penalty pursuant to Section 20(d) of the Securities Act and Section 21 of the Exchange Act in an amount to be determined by the Court.
IV.
Enter an order barring Acs from participating in any penny stock offering pursuant to Section 20(g) of the Securities Act and Section 21(d)(6) of the Exchange Act.
VI.
Order such further relief, equitable and legal, as the Court may deem just and proper.
DATED: August 20, 2003 Respectfully submitted,
_______________
Julie K. Lutz
Tracy A. Tirey
Attorneys for Plaintiff
Securities and Exchange Commission
http://www.sec.gov/litigation/complaints/comp18307.htm
Sandy, everyone here knows all about IFTA. So what's your point?
Mother Mary Comfort Me..
Mary graduated from New York University School of Law in 1992 and since then has been in private practice in New York City. Her practice is in the areas of corporate and securities law. Mary speaks Spanish as a second language and attended college at the University of New Mexico, where she received a B.A. in Economics.
mohara@bschloss.com
http://www.bschloss.com/bios/Payton.html
OPINION OF BONDY & SCHLOSS LLP
crooks!
We be schlossen and tossen...
Gerry is a graduate of Louisiana State University (B.S. 1965) and Brooklyn Law School (J.D. 1968). Prior to entering private practice he was an Assistant Attorney General of the State of New York in the Bureau of Securities and Real Estate Financing and Special Counsel to the New York Stock Exchange, Inc. He also served as a Captain in the Judge Advocates General Corp in the United States Army Reserves. He is admitted to practice law in the state Courts of New York and the United States District Courts for the Southern and Eastern Districts of New York. Gerry has extensive experience in the areas of Securities for both Public and Private Financings as well as in Corporate and Commercial Transactions.
gadler@bschloss.com
Joel, is a graduate of Dartmouth College (A.B., Cumlaude with highest distinction, 1948) and Yale Law School (J.D., 1951). He is admitted to practice law in the state courts of New York and the United States Supreme Court. Joel, a corporate lawyer additionally concentrates his practice in the oil, gas and energy area.
Joel has represented a number of exploration and development companies, public and private and has organized a variety of investment vehicles for oil and gas industry clients. He has also been active in venture capital financing and the small business investment industry and served for twenty years as President of an SBIC. He is an active member of the energy law committee of the Association of the Bar of the City of New York and is a member of the energy committees of the New York, Federal Energy, American and International Bar Associations. Joel is also active in community affairs, serving as a member of the Board
jberson@bschloss.com
Bob, a graduate of University of Pennsylvania (B.A. 1963), received both his Bachelors of Law (1966) and his Masters in Corporate Law (1967) from New York University School of Law. He is admitted to practice law in the State Courts of New York, the United States Supreme Court, the United States Second Circuit Court of Appeals, the United States District Courts for the Southern and Eastern Districts of New York and the United States Tax Court. Throughout his career Bob has practiced in the areas of Corporation, Commercial and Contract Law, with a specialty in representing closely-held corporations. As a member of the American Bar Association, he serves on various Subcommittees dealing with Business and Commercial law. He is also a member on the Committee on Corporate Law of the New York County Lawyers' Association. He authored the article entitled "Certain States Laws Affecting Acquisitions" which appeared in the Handbook of Mergers, Acquisitions and Buy-Outs published by Prentice Hall, Inc.
rhaber@bschloss.com
http://www.bschloss.com/home.html
I have seen this website and do not believe there is a connection other than the use of the term: "Infotopia"
I don't know. I've never been able to keep track of the mulitude of entities and individuals that had their hands in the IFTA till.
OPINION OF BONDY & SCHLOSS LLP
Exhibit 5.1
[Bondy & Schloss LLP Letterhead]
March 27, 2002
Infotopia, Inc.
3635 Boardman Canfield Road
Canfield, OH 44406
Ladies and Gentlemen:
We have acted as counsel to Infotopia, Inc., a Nevada corporation (the
"Company"), in connection with a Registration Statement on Form S-8 (the
"Registration Statement") being filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, relating to the
registration of an aggregate of 181,000,000 shares (the "Shares") of Common
Stock, $.001 par value per share, issuable pursuant to a Legal Fee Agreement
between the Company and our firm (the "Agreement") and pursuant to a Severance
Agreement between the Company and Gregory L. Kofford ("Severance Agreement").
In connection with the foregoing, we have examined originals or copies,
satisfactory to us, of all such corporate records and of all such agreements,
certificates and other documents as we have deemed relevant and necessary as a
basis for the opinion hereinafter expressed. In such examination, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity with the original documents of
all documents submitted to us as copies. As to any facts material to such
opinion, we have, to the extent that relevant facts were not independently
established by us, relied on certificates of public officials and certificates
of officers or other representatives of the Company.
Based upon and subject to the foregoing, we are of the opinion that, when
issued and paid for in accordance with the Agreement and the Severance
Agreement, the Shares will be validly issued, fully paid and non-assessable.
We are members of the bar of the State of New York and are not licensed or
admitted to practice law in any other jurisdiction. Accordingly, we express no
opinion with respect to the laws of any jurisdiction other than the State of New
York and the federal laws of the United States.
We hereby consent to the use of our opinion as herein set forth as an
exhibit to the Registration Statement. In giving such consent, we do not thereby
concede that we are in the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations thereunder.
Very truly yours,
Bondy & Schloss LLP
NEVADA 95-4685068
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or organization)
http://www.sec.gov/Archives/edgar/data/1066759/000093041302001056/c23829_s8.txt
http://www.sec.gov/Archives/edgar/data/1066759/000093041302001145/c23908_nt-10k.txt
http://www.sec.gov/cgi-bin/browse-edgar?company=Infotopia&CIK=&filenum=&State=&SIC=&...
Welcome, fellow information pirate, to the Infotopia Free Web Annex (IFWA). In order to keep the spirit of freedom alive and information available to all, we have hacked out our own little corner of the 'Net. That's right, baby, this is your exit on the Information Superhighway. Take a look at the links below for the Heart of the Annex. Each will take you to a submission we have received, complete with its own little pearls of wisdom. Some of these stories seem impossible, others contradict every other piece of information available on or off the Annex. Still, all our authors claim they have the truth on tap, so one of them could be right. Personally, I think they're...
http://www.geocities.com/TimesSquare/Lair/5233/
http://www.internetcap.com/cgi-bin/config.pl?read=186
http://www.internetcap.com/cgi-bin/config.pl?read=252
http://www.internetcap.com/cgi-bin/config.pl?read=258
http://www.internetcap.com/cgi-bin/config.pl?read=330
pennyking, I have no idea and have not been able to figure out how/why this stock is still being traded. Could it possibly be directed by the bankruptcy trustee? Or are other entities still involved? Any thoughts you may have would be appreciated.
If we do not change the direction we are headed, we will end up where we are going.
http://www.oxfordcp.com/nav.html
http://www.oxfordcp.com/
SEC investigating Oxford Capital
Larry Rulison
Contributing Writer
Towson money management firm Oxford Capital Management is under investigation by the Securities and Exchange Commission for allegedly inflating investment return figures.
The SEC issued a cease-and-desist order and started administrative proceedings against the firm and its president, John G. Danz Jr.
The civil proceedings could lead to fines against the company or Danz, or other SEC action.
Danz declined to comment until his legal counsel could review the accusations.
The SEC alleges that from 1998 to 2001, Oxford Capital inflated performance figures for its Enhanced Equity portfolio.
The SEC says that Oxford told the Nelson Investment Manager Database that its 10-year annualized return for the period ending June 30, 2000, was 23.39 percent when it was really only 15.58 percent.
Such inflation, the SEC alleges, resulted in Nelson ranking Oxford Capital as one of its Top 20 Money Managers in the country from 1998 to 2001.
The SEC also said that Oxford Capital overstated the amount of assets in the Enhanced Equity portfolio during various periods. For example, it claims that the firm told Nelson that it had $65 million in the portfolio at the end of 1999 when it actually only had $22 million.
"Oxford utilized the false and misleading ranking in marketing brochures and to advertise its services in various newspapers, including the Baltimore Business Journal and the Baltimore Sun," the SEC says in an administrative release.
The SEC says that the firm, which manages roughly $125 million in assets, also reported false investment results to two other reporting services, the Mobius Group and Effron Enterprises as well as to other investors and brokers.
http://washington.bizjournals.com/washington/stories/2002/09/23/daily23.html
Or is it this one?
http://www.oxford-capital.com/
PREDICTIONS, PROJECTIONS AND PLANS FOR THE FUTURE
February 5, 2001
Between June 1, 2000 and January 4, 2001, Infotopia, Inc. issued around 170 million shares of its common stock. That’s more than ten times the 19 million shares outstanding at the start of last June. As we saw in Part I of this series (See Stock or Schlock?, Infotopia, Inc., Part I - Is This A Limited Time Offer?), around 50 million of those shares were registered on a series of S-8 Registration Statements between April 2000 and November 2000. And the rest?
RUSHING TO REGISTER
Most recipients of Infotopia stock did not have to wait long to see their shares registered. On October 6, 2000 the Company filed an SB-2 Registration Statement with the Securities and Exchange Commission. By the time that filing reached its final amendment, on November 3rd, it included 96.73 million shares. The Registration Statement included 23.5 million shares for Thomas Kernaghan; 2.5 million shares for J.B. Marc; 3.7 million shares for Oxford Capital; 4.1 million for Capacity Unlimited; 3.1 million for First Equity Capital; 5 million for Vista Partners Ltd.; and 10 million for Bay Partners Ltd.
Perhaps most notably, the SB-2 also included 2.88 million shares registered for the Company’s CEO and Chairman Daniel Hoyng; 2.6 million shares registered for its President Ernest Zavoral; 1.475 million shares registered for its Secretary Marek Lozowicki; and 750,000 shares for Infotopia Director Clinton Smith. According to the Registration Statement, these represented all of the shares owned by Messrs. Hoyng, Zavoral, Lozowicki and Smith at the time. Which raises at least one interesting question – why was the Company’s senior management, which was predicting that revenues, and profits, would soon skyrocket, planning for the sale of all of their shares?
As it turns out, Messrs. Hoyng , Zavoral, and Lozowicki had more stock to register by the time the Company filed its next SB-2, registering 34.7 million more shares for a group of selling shareholders on January 11, 2001. This time those three corporate officers are registering some, but not all, of their stock – 1.12 million shares each.
Not all of the news was about selling stock. It seems that buying shares is on the agenda as well. On January 12th, the day after it filed the latest SB-2, the Company announced plans to spend about $12 million buying back shares of its common stock over the next 12 months. Does the plan include the purchase of any shares currently being registered? Will shares be purchased privately, or from the public float? The press release did not say. The Company said that the buyback program would “help minimize any further dilution,” but how much more dilution should investors be expecting. After all, Infotopia has again issued virtually all of its authorized common shares – even after the recent increase from 100 million to 200 million shares. Volume in Infotopia shares spiked sharply on January 12th. 14.5 million shares were traded – almost double the previous day’s volume.
The January 12th press release also stated that the Company “is projecting in excess of 60 million in profit over the next 18 months.” On that same day, Infotopia issued a second press release asserting that “preliminary sales figures” (of the Bun & Thigh Rocker, Backstroke, Hot Mommies ™, Torso Tiger, Body Rocker, and other products) for the two-week period ending January 11, 2001 were in excess of $4,000,000.
Investors may wish to consider these most recent projections in the context of the Company’s latest 10-Q, which was filed on January 23, 2001. That report, for the quarter ended November 30, 2000, indicated a net loss for the period of $25.4 million. Revenues were $8,657,000, but even that figure is somewhat less than might have been expected if sales of Torso Tiger maintained a pace of $800,000 to $1 million per week throughout the period. Infotopia says that the cost of those sales was $2.4 million, but then there were also selling and marketing expenses of $9.3 million and general and administrative costs of $4 million. That does not even include professional service and consulting fees of $16 million. Accounts receivable totaled $1.6 million, while accounts payable and accrued expenses were $2.3 million. And, despite the money generated from sales of stock and the issuance of debentures, the Company reported just $497,000 in cash.
One final thought about predictions and projections. We recently reviewed a July 23, 1999 press release issued by National Boston Medical, Inc. (NBM) concerning, among other things, the “Backstroke® Back Massager” – a product now being marketed by Infotopia. As we pointed out in Part I of this series (Stock or Schlock? – Infotopia, Inc., Pt. I – Is This A Limited Time Offer?), Infotopia was part of NBM before it was spun off as a separate company through a reverse-merger with Dr. Abrevanel’s Formulas, Inc.
That July 23, 1999 press release from NBM predicted that a new licensing agreement with Tristar Products of Parsippany, New Jersey, would “bring the Backstroke® to market with unprecedented speed and market clout.” In fact, Ernest Zavoral, then President of NBM’s Flex Marketing Division and now President of Infotopia, said “ased on our past success and Tristar Products success, we anticipate a minimum of 300,000 new units sold through infomercials and 500,000 through retail distribution at our average price to Tristar this should translate into $14,950,000 in sales and $4,250,000 in profit for National Boston Medical, Inc.”
On October 6, 2000, Infotopia stated that it planned to reintroduce the Backstroke® Back Massager, noting that the device had generated aggregate revenues of $5 million since February 1999. What happened to those projected $14.9 million in sales? NBM’s November 22, 1999 Form 10-Q (the only 10-Q report filed by NBM before it ceased to file regular reports with the SEC and withdrew as a filing company in February 2000), acknowledged that the device had contributed significantly to NBM’s revenues of $1.2 million for the quarter ended September 30, 2000. But NBM added a cautionary note, stating that “the Company does not believe prior growth rates are indicative of future operating results, especially in light of the fact that the Company's Backstroke™ product has a finite lifespan.” That leaves investors to ponder projections, and wonder what revenues Infotopia can realistically expect from future sales of this product.
VISIONS FOR THE FUTURE
Despite the lack of available cash in its bank account and shares in the treasury, on January 22nd the Company announced that it was pursuing the acquisition of two “Infomercial related Companies with revenues in excess of $175,000,000 and profits in excess of $8,000,000.” “Due to the sensitivity of the negotiations” the Company declined to identify the targets.
In that same press release, Infotopia said it was seeking to merge or exchange shares with a “NASDAQ ready” company, noting that these acquisitions and mergers created “the potential for a Company with $400,000,000 in revenue and $60,000,000 in profit.” We can only assume that the phrase “NASDAQ ready” refers to a company that would qualify for NASDAQ listing. The Company did not say whether it had even identified such a potential NASDAQ-ready merger partner. Nor did it provide a basis for its revenue and profit projections. But most importantly, Infotopia did not say how it planned to pay for these various transactions – or what the terms of each deal might be.
This absence of details did not discourage investors, who traded 36 million shares on January 22nd and another 32.5 million shares on January 23rd. Who was selling all of those shares? There’s no way to know for certain. It is worth noting, however, that the January 11th SB-2 contemplates that selling shareholders might engage in short selling. Short sales occur when someone sells shares that he or she does not own, or does own but may not be able to, or desire to, deliver at the time of the sale. The short seller later “covers” the sale by delivering the shares – something the selling shareholders of the SB-2 would be able to do once that Registration Statement is declared effective by the SEC.
The increased volume did not escape the notice of Infotopia CEO Daniel Hoyng. On January 24th he sent a public letter to shareholders, beginning “[w]ow sixty-eight million shares in volume the past two day, I am amazed at how big a following Infotopia continues to assemble.” Just four months earlier, on September 28, 2000, Hoyng had sent another open letter to Infotopia shareholders. Then, he had thanked them for trading 318 million shares during the preceding three months, taking particular care to commend “supporters” in Internet “chat rooms, and, in particular, one poster on the Raging Bull Message Board who apparently had posted “due diligence” information about the Company with particular vigor.
It was a most unusual public proclamation by a corporate CEO – praising “chatters.” In his January 24th message, Hoyng said he wanted to clarify some recent announcements about the Company. First, he addressed the third quarter financial statements, suggesting that “the majority of the expenses incurred will not be repeated in future quarters.” However, while Infotopia may not have to incur additional production and development costs for products that are already on the market, or ready to be introduced, won’t it be required to incur similar expenditures each time it wants to introduce a new product in the future? And doesn’t Infotopia plan to introduce such new merchandise from time to time? Surely, even the most successful products in the current pipeline will eventually run their course and have to be replaced with fresh ideas. If that is the case, shouldn’t the Company expect to keep incurring those production and development costs?
Mr. Hoyng predicts that “January should finish with about ten million in sales and two million in profit.” Sales of the Bun & Thigh Rocker, he indicates, are growing weekly. In a January 12th press release, the Company had stated that, for the previous two weeks, sales of various products, including the Bun & Thigh Rocker, Backstroke, Hot Mommies™, Torso Tiger, and BodyRocker, totaled around $4 million. Can sales increase at the pace necessary to achieve Mr. Hoying’s prediction? Infotopia recently said it planned to change its fiscal year from a November year-end to a December year-end. That, unfortunately, could mean another delay before audited financial statements become available. Now, it appears, investors will not know for sure whether the Company achieved these revenues and profits for about four months – when the annual report is filed containing the first audited financial statements since Infotopia started selling Torso Tiger.
Then there are those pending acquisitions. How will the Company pay for these businesses? Mr. Hoyng says that Infotopia is insisting that the “purchase price will be stock,” with additional shares allocated to bonuses for new employees. But the Company has already issued virtually all of its authorized common stock, so where will these shares come from? There is no indication that the Company has yet to commence its stock buy-back program, or that it has available cash to buy-back any significant number of shares at the present time. Does that mean Infotopia will soon look to increase its authorized shares once again – for the third time in less than a year? What of the “slower dilution” that Mr. Hoyng predicts for this fiscal year?
The January 24th letter to shareholders also addresses the Company’s plans for NASDAQ listing. Last September 18th, the Company issued a press release saying it intended to seek listing on the American Stock Exchange, a process that it said “normally takes eight weeks but can vary depending on how busy the American (sic) Exchange review committee is.” But eight weeks might have been somewhat optimistic in view of AMEX listing guidelines. In order to gain listing, the AMEX requires a company to have $750,000 in pre-tax income for the latest fiscal year or two of the three most recent years; a public float valued at $3 million; a share price of $3; and stockholders equity of $4 million. Infotopia’s 10-Q for the quarter ended August 31, 2000 showed pre-tax loses of $11 million and stockholders had a negative equity of $3.5 million. Add to that the fact that Infotopia shares were trading at about $1 on September 12th and the chances for AMEX listing seemed quite remote. (Alternative AMEX guidelines also required $4 million in shareholders equity as well as a $3 share price).
In any event, Infotopia soon abandoned its quest for an AMEX listing. Less than two weeks after issuing that press release, the Company said it would instead pursue NASDAQ Small-Cap or National Market listing in response to “emails and calls to the Company” from shareholders who expressed that preference. In any event the Company, which would not have met the qualifications for listing on either of those NASDAQ markets at that time, said it would delay the process until early 2001. By then, Infotopia said, “this delay will hopefully allow the share price to reach the $3.00 to $5.00 level and eliminate the consideration for a reverse split, to achieve the minimum required trading price for a national exchange.” It is now early 2001, and with Infotopia shares presently trading at around 16 cents a share they still have a long way to go.
Nevertheless, it seems the Company says it wants to gain NASDAQ listing because the Company’s “strong, revenue growth, solid base of products, projected cash flow, and undervalued share price” makes it “a prime target for potential takeover bids.” From a practical perspective, however, isn’t the likelihood of a takeover remote? The Risk Factors contained in the latest SB-2 filing certainly suggest that the Company’s future success depends upon the continued participation of its management team. Would they remain with the Company in the wake of a hostile takeover? And don’t takeover experts most frequently target businesses that have lots of cash? At last report, Infotopia did not.
Mr. Hoying’s January 24th letter suggests two possible scenarios for becoming a NASDAQ company. In the first, Infotopia would merge with another, debt-free entity that would meet NASDAQ listing qualifications. Infotopia shareholders would receive $10 worth of stock for every $4 of Infotopia shares that they owned. If that is a possibility, why would all of those existing shareholders – including members of management - be registering their shares for sale now – at prices around 20 cents per share. Wouldn’t they rather get two and one half times the value of their shares after such a merger?
In the second scenario, Infotopia would sell its operating subsidiary to a NASDAQ-ready company. In that case Infotopia would continue to trade on the OTC Bulletin Board as a holding company, and would own a controlling interest in the new NASDAQ listed entity that the Company says would be valued at approximately $50 million. At some future point, Hoyng’s letter suggests, shares in Infotopia might be exchanged for those in the NASDAQ company.
But the Company does not say whether it has identified a potential candidate for either scenario – or why a company that could qualify for NASDAQ would want to pursue a merger that seems to be weighed so heavily in favor of Infotopia. After all, Infotopia still would not, on its own, satisfy the requirements for listing on either the NASDAQ Small Cap Market or NASDAQ National Market.
Finally, the Hoyng letter says that Infotopia has “quietly been investing” in a project that targets customers through “viral” email. Investing what? Shares, of course. According to CEO Hoyng, “[m]any shares of the Company’s common stock have been issued for Internet design and promotion.” How many shares? Infotopia does not say.
It seems that the Company has been planning to send unsolicited emails to its database of customers. It would also encourage those customers to forward the unsolicited “viral” emails to their friends and families – in exchange for “Info Bucks” that could be applied against the purchase price of Infotopia products.
Is the unsolicited email campaign likely to produce willing customers? Or will recipients of the emails just feel they have been “spammed” – a word that defines unsolicited and unwelcome email messages. In any event, Infotopia says it has decided to license this process to Millenium Direct Inc., a Pink Sheet company, in exchange for 85% of that entity and certain royalties. That way, the Company says, it can generate even more sales by building “a potential two hundred million dollar company with fifty million in profit in less than two years.” What is the basis for such lofty projections? The Company doesn’t say. And why would Millenium Direct surrender control to Infotopia? That, perhaps, is another story.
Stay tuned.
http://www.stockpatrol.com/schlock/articles/infotopia4.html
Janice, in the end all we have is our own experiences molding the framework of our hearts; from which we must still trust to guide us wisely.
btw, from personal observations I do realize the pennyking stands on one side in regards to views of stockpatrol. Are such views then only "one sided?" Probably.
penny, if you wish to threaten me with a lawsuit you may do so publicly. No need to PM me ... and since I am not a premium member, I cannot PM you in return, nor would I care to do so. In the interest of clarity; are you saying you did not violate a vow of confidentiality? I believe you know what I refer to.
BYE BYE SHARES
February 2, 2001
Since Infotopia, Inc merged with Dr. Abravenal’s Formulas, Inc. last May, the Company has issued over sixty press releases – that’s about one news item every three days. As we have seen in our earlier installments on Infotopia, many of those announcements involved new products, projections and plans, even if details were sometimes sparse. There was little mention, however, of what may have been the Company’s most notable activity – issuing shares. So many in fact that Infotopia has had to increase its authorized shares twice in the past six months.
TIGER YES, TONY NO.
Shares of stock have been flying out of the Infotopia at a rapid pace. But that’s not all that has been leaving the Company. Since late September the Company has announced two notable departures. On October 5, 2000, the Company announced that its Chief Financial Officer and Director, Tony Ferracone, had resigned four days earlier. Another Director, James Kosta, departed from the firm on September 22nd.
In an October 5th press release, Mr. Ferracone sought to explain the reasons for his departure. “My role in the company was planned as one with a short term,” he stated. He went on to say that “Mr. Kosta and I were enlisted to help the company attain its initial positioning and fund its first product. As time has gone by we were both less and less involved in key decisions regarding the company's future. The Board of Directors as it stands now is the core group that has been responsible for the company's growth for the last 6 weeks.”
Does it seem that Mr. Ferracone was attempting to distance himself from the Company’s “key decisions” during those past six weeks? Was it coincidental that the period in question coincided with a series of press releases proclaiming revenues from Torso Tiger? The resignations of these two directors came only days after Infotopia announced it was ending its relationship with Strategic Communications, the public relations firm that had been issuing press releases for Infotopia since right after the reverse-merger with Dr. Abravenal’s Formulas, Inc.
Almost four months later, it does not appear that Infotopia has found a full-time replacement for Mr. Ferracone. On January 23, 2001, the Company filed its Form 10-Q for the period ended November 30, 2000. Marek Lozowicki, the Company’s Executive Vice-President and Secretary, signed that form as Assistant Chief Financial Officer.
DILUTE ME NOT
Meanwhile, the Company has been issuing shares with even more frequency than it has been announcing new products. On August 4th, the Company said that it had signed a Letter of Agreement to obtain a $20 million financing package that would allow it to “finance our operations and inventory, and will help us reach profitability much faster than we would have otherwise." Infotopia did not identify its financing partner, or offer any details of the proposed terms, but promised to do so in a Registration Statement that it intended to file “in the next two weeks.”
The press release did note, however, that the Company would be increasing its authorized shares from 40 million to 100 million “in order to prepare for future exercises of the financing.” At the same time, Infotopia’s President Ernest Zavoral reassured investors that the increase in authorized shares “does not mean that any more shares are issued or in the public float. It is important that people realize that increasing a company’s authorized shares is quite normal and does not mean any dilution.”
This did not mean that the shares would not be issued in the future – the near future. Two weeks came and went without any Registration Statement further detailing the financing. Instead, a September 28th letter to shareholders revealed that Infotopia had backed away from the financing because “of the high cost of warrants and fees attached.” The shareholder letter did not specify what those warrants and fees might have involved, but it did state that Infotopia continued to pursue financing; believed that new products would create the need for about $5 million in working capital for inventory and media; and wanted to satisfy both of these goals while creating “the least amount of Shareholder dilution.”
Dilution, however, was on its way. Approximately 34.3 million Infotopia shares were outstanding as of July 14, 2000. By October 23rd there were 99.4 million shares outstanding – almost a three-fold increase. And there was more to come.
AND ALL THOSE SHARES
On September 27th, Infotopia announced that it had raised more than $3 million since August 1st, through “equity placements with JB Marc and Associates, Oxford Capital, Thomson Kernaghan and others.” According to the release, those funds had been utilized to retire 100% of the Company’s long-term and short-term debt, purchase Torso Tiger inventory and for working capital purposes. The press release did not, however, address the terms of those deals, or indicate just how much equity had been placed, or at what price.
At least one of those questions was answered the following day. In its September 28th letter to shareholders, Infotopia revealed that it had retired all of its outstanding debt by issuing over 25 million shares of stock. According to Infotopia, “[t]he success of the Torso Tiger and all the new products in development would not have been possible without the issuance of these shares.” That success was also limited by available funding. As the Company pointed out, “each new product in development requires in excess of $300,000 for the cost of the infomercial production, molds and tooling, product testing and other related miscellaneous developmental expenses, after launch the a [sic] product like the Torso Tiger can utilize between $1,000,000 for inventory and media prior to producing sales.”
The September 28th letter does not say who received those shares but, based upon the previous day’s press release, it would seem that a significant portion had gone to J.B. Marc, Oxford Capital and Thomson Kernaghan.
So just how was Infotopia doing in its efforts to create “the least amount of Shareholder dilution?” We found some answers in the Company’s public filings.
FAMILIAR FACES
Between April 28, 2000 and September 21, 2000, the Company registered over 36 million shares on eight separate S-8 Registration Statements. That stock had been issued to various consultants and lawyers, often within days of the time the Registration Statements were filed. Unlike most other Registration Statements, S-8s become effective at the time they are filed. That means the recipients of those shares are free to trade them immediately after the filing has been accepted by the Securities and Exchange Commission.
Who were those attorneys and consultants? Some of the names may be familiar to readers of Stock Patrol. For instance, several of the S-8s and accompanying opinion letters were filed by the law firm of Chapman & Flanagan, Ltd., whose experience with S-8 filings was chronicled in our recent series on another OTC Bulletin Board company, Bach-Hauser, Inc. (See Stock or Schlock?, Bach-Hauser, Inc. – A Haus Full of Consultants; Radar’s Doghouse, Bach-Hauser, Inc. - The First Thing We Do, Let’s Give Stock To All the Lawyers; and Radar’s Doghouse, Bach-Hauser, Inc. – Everyone Makes Misteaks). The Infotopia S-8s included a total of 1.125 million shares issued to the lawyers - Sean Flanagan and Daniel Chapman (Infotopia registered another 62,500 shares for an attorney named Herbert Jacobi. Jacobi, like Chapman and Flanagan, had been among the recipients of Bach-Hauser S-8 stock).
Chapman & Flanagan are not the only familiar names to have received S-8 shares from Infotopia. On May 23rd the Company registered 1.4 million shares for a pair of consultants named Alan Berkun, Esq. and Jeffrey E. Jacobson, Esq. Stock Patrol previously noted that Berkun received S-8 consulting shares from a company called Far East Ventures (See Stock or Schlock, Far East Ventures, Inc. Part III – Consultants To Spare) and that Jacobson was issued S-8 shares for consulting services to HIV-VAC, Inc. (See, Radar’s Doghouse – HIV-VAC – Out Of Africa?).
This time Berkun and Jacobson each received 700,000 shares from Infotopia under separate consulting agreements dated May 19th. Those agreements contained most of the same material terms as the ones that had been utilized by Far East Ventures and HIV-VAC. Here, each man agreed to “assist the Company in identifying acquisition targets for the Company and advise the Company in structuring mergers or other acquisitions.” As was the case with the Far East Ventures and HIV-VAC agreements, the shares issued to Berkun and Jacobson were “non-refundable,” but the Infotopia consulting agreements could be cancelled, by either party, on fifteen days notice. And, of course, Infotopia agreed to register the shares, on Form S-8, immediately.
Since the shares issued by Infotopia to Berkun and Jacobson were “non-refundable” this meant that each man could receive, register and sell the shares, and then cancel their agreements, without rendering any services. Indeed, the contracts contemplated this possibility, stating that “[n]othing contained herein constitutes a commitment on the part of the Consultant to find an acquisition target for the Company or, if such a target is found, that any transaction will be completed.” If, however, either Berkun or Jacobson did introduce a successful deal to Infotopia, he would receive an additional 700,000 shares – which would be registered within 14 days on yet another Form S-8.
Did Berkun and Jacobson introduce potential acquisitions to the Company, and if so were the transactions consummated? We were unable to find answers to those questions in the Company’s public disclosures. We also found no statement that would indicate whether the consulting agreements were cancelled or still remain in force. But we did discover that Infotopia registered an additional 1,325,000 shares for Allan Berkun, and another 1,325,000 shares for Jeffrey Jacobson on an S-8 filed just one month later, on June 19, 2000. This time, Infotopia said Berkun and Jacobson were receiving the shares in exchange for legal services. That same Form S-8 registered an additional 2,850,000 shares issued to three other individuals for legal and internet consulting services.
As it turns out, Jacobson received still more Infotopia shares for his legal services. On August 11th, the Company filed an S-8 registering another 3 million shares for Jacobson, as well as 600,000 shares given to the law firm of Bondy & Schloss and another 1.3 million awarded to another consultant. (Bondy & Schloss later received an additional 1 million shares that are included in the Company’s most recent SB-2 Registration Statement).
There’s more. On August 25th Infotopia filed an S-8 registering 1.5 million shares that had been issued to Jacobson’s partner, Bruce Colfin. Mr. Colfin, like his partner, had also received S-8 shares from HIV-VAC, Inc. Then, on September 21st Infotopia amended that S-8. This time, it seemed, the Company registered those 1.5 million shares for Jacobson instead. (According to the Form 10-Q filed by the Company on January 23, 2001, 1.5 million shares issued to Jacobson were subsequently cancelled. It is not clear, however, whether shares were issued to Colfin).
The S-8s did not specify what legal services were to be provided by Berkun, Jacobson or Colfin. Mr. Jacobson is a partner in the law firm of Jacobson & Colfin, P.C., which specializes in Entertainment Law, Trademarks, Video, Comics and Toys, Literary Property, Theater and Intellectual Property Law. Mr. Colfin also specializes in Entertainment Law. We have found no similar resume reciting Mr. Berkun’s current practice.
As we reported in one of our articles on Far East Ventures, Inc. (Stock or Schlock? - Far East Ventures, Inc., Part III: Consultants To Spare), it appears that Mr. Berkun has shared office space with an individual named Joseph Blumenthal. Mr. Blumenthal is the President of J.B. Marc and Associates, Inc., a company that received S-8 stock from Far East Ventures. As we noted earlier, J.B. Marc was one of the companies that provided a portion of the $3 million funding that Infotopia says it used to retire outstanding debt. To be more specific, according to Infotopia’s Form 10Q for the quarter ended August 31, 2000, J.B. Marc purchased 2.5 million shares on August 21st for $967,000. All of those shares were registered on the Form SB-2 Registration Statement originally filed by Infotopia on October 6, 2000.
Is there a connection between Berkun and Blumenthal besides shared offices? Perhaps. Two individuals named Alan Berkun and Joseph Blumenthal were named in an order issued by the National Association of Securities Dealers in 1998. That NASD proceeding charged, among other things, that a New York brokerage firm called Lexington Capital Corporation and Berkun collaborated to defraud investors and impede regulatory scrutiny.
The NASD action alleged that Lexington Capital, acting through Berkun and others, engaged in improper business with a person who had been disqualified from working for a broker-dealer; violated penny stock rules; sold unregistered securities; charged customers excessive markups; and failed to disclose the amount of remuneration received by the firm. The NASD also concluded that the firm, acting through Berkun and others, had falsified firm records in order to conceal the fact that Blumenthal solicited and effected over 300 customer transactions when he was not properly registered with the NASD and several states. According to the NASD, transactions were improperly processed for Blumenthal under Berkun’s registered representative number.
The record indicates that the complaint was settled and that Berkun was fined $150,000, ordered to pay more than $200,000 in restitution, and barred from association with any NASD member, either as a principal or registered representative. Berkun agreed to resign from the firm and surrender all ownership interest in Lexington Capital. Blumenthal, who was fined $100,000, was also barred from associating with any NASD member in any capacity.
As it turned out, the 2 million or so S-8 shares that Berkun received from Infotopia were a mere drop in the bucket. On August 8th he filed a Form 144 with the SEC in order to sell 8,330,000 Infotopia shares under Rule 144. How did he receive that stock? As a consultant, a lawyer, or perhaps a private investor? The Form 144 did not say.
A LITTLE MORE DILUTION
We have been unable to find any indication that Infotopia gave, or sold, another 8,330,000 shares to Berkun, but the Company did issue exactly that number of shares to two consultants who would be managing the Torso Tiger campaign. On July 7th Infotopia filed an S-8 registering 8,330,000 shares on behalf of those consultants - Mark Levine (4,165,000) and David Richmond (4,165,000). This, it appears, was in addition to the shares (and of course the ongoing royalties and minimums) that Infotopia had agreed to pay for rights to Torso Tiger.
For a Company that said it wanted to create the “least amount” of shareholder dilution, Infotopia has certainly not been shy about issuing shares. On June 1, 2000 Infotopia had 19.5 million shares outstanding. By January 4, 2001, the Company had issued 190 million shares. In order to accomplish this it was required to increase the number of authorized shares twice – from 40 million to 100 million on August 20, 2000, and then to 200 million (of which 190 million were common shares) in October 2000. That’s right. They’re almost out of stock again. For the time being, at least, it seems that Infotopia has issued all of the shares it can. So much for minimal dilution.
Who (in addition to those S-8 recipients mentioned earlier) has been receiving all of these shares? A few examples:
• over 17 million shares went to various product and management consultants
• more than 32 million shares were issued to various investor relations, marketing and financial consultants.
• almost 25 million shares were issued for various license fees.
• over 7 million shares were distributed to various officers and directors, including shares issued to satisfy certain prepaid expenses.
• approximately 2.5 million shares were given to First Equity Capital as compensation for their services relating to the issuance of promissory notes with warrants attached.
• 14.4 million shares were issued to a British Virgin Islands company called Altea Investments on January 4, 2001. According to Infotopia’s January 23rd 10-Q, this included 12 million shares issued as collateral for a $600,000 loan and 2.4 million shares given to Altea for financing fees. The 10-Q indicated that the 12 million shares are to be returned to Infotopia when the debt is paid in full, or retained by Altea if timely payment is not made.
There are, however, more details to the Altea transaction. In December 2000, Infotopia issued a three year Convertible Debenture to Altea for $600,000. Altea can convert the debenture into shares of the Company’s stock – beginning forty five days after the debenture was issued. Such conversion would in effect preclude Infotopia from repaying the loan. The Company can refuse to accept the conversion if Infotopia’s stock price is below 5 cents per share at that time. Even then, in order to prevent the conversion, Infotopia must pay Altea 135% of the portion of the loan that Altea was seeking to convert. Infotopia is obligated to include these shares in a Registration Statement that is declared effective by March 1, 2001. The Company may prepay the loan once a Registration Statement has been effective for a designated period of time – but again must pay 135% of the amount due. At the time of the financing, Infotopia also issued Altea a warrant to purchase 2.4 million shares of Infotopia stock at $.001 per share. (Details of the agreement between Infotopia and Altea are contained in the documents attached as exhibits to the January 11th SB-2).
• about 12 million shares were issued upon the conversion of promissory notes
• approximately 500,000 shares were distributed for settlement of debts.
• 6.5 million shares were issued to Thomas Kernaghan to settle obligations of National Boston Medical that were assumed by the Company at the time of the reverse-merger
• over 45 million shares were sold, for approximately $7 million, to investors including, Corinthian Financier Groupe; Thomas Kernaghan; Oxford Capital; J.B. Marc and Associates, Inc. (Mr. Blumenthal’s firm); MLJ Management; Capacity Unlimited; Bay Partners, Ltd.; and Vista Partners.
Infotopia’s public filings provide scant information about some of these purchasers, aside from their names, the number of shares issued, and the amounts paid for those shares. In some cases, however, the Company indicates that not all payments for those shares were made at the time they were issued. Instead, in the case of some shares sold to Thomas Kernaghan and Capacity Unlimited in particular, Infotopia deferred a portion of that payment until the Registration Statements for those shares had been declared effective. Thus, in effect, it appears that these particular “purchasers” would be paying for shares with the proceeds from their sale.
Of course, not all shares issued by Infotopia have been registered on Forms S-8. That registration form can only be used for certain stock issued to consultants or attorneys, for specified categories of services. Other shares require more detailed Registration Statements, like Form SB-2 and, when a company qualifies, Form S-3.
Were all of these new shareholders here for the long haul – ready to ride the Company’s revenue and profit projections to riches? Or were more Registration Statements on the immediate horizon? In our next installment we will explore this question and some of the Company’s more recent announcements.
http://www.stockpatrol.com/schlock/articles/infotopia3.html
INFOTOPIA, INC. (OTCBB:IFTP), PART II – FOR A FEW PRODUCTS MORE
January 31, 2001
Infotopia Inc. has not been betting its future solely on sales of a fitness device called Torso Tiger. Since its reverse-merger with a company called Dr. Abravenal’s Formulas, Inc., Infotopia has continued to announce plans for a series of other products as well. Most of these products have not generated significant revenues for the Company so far. That, however, has not deterred investors from responding to many of these myriad announcements.
A ONE SHOT
On May 9th, just five days after disclosing the merger, the Company said it had shipped 18,000 units of a 30,000 unit order of Cactus Jack’s ‘One Shot Catch A Lot Fishing System’ to Kmart distributors. Infotopia said it expected “to begin announcing other large distribution orders in the near term.” We did not find any such further announcements. Instead, on August 31st, the Company issued a press release discussing a lawsuit that had been filed by Cactus Jack. According to Infotopia’s Chief Financial Officer, Tony Ferracone, the legal action by Cactus Jack was “clearly without merit. Infotopia lived up to our agreement with Cactus Jack. The product didn’t fit our performance criteria so we settled with him to discontinue it.” Mr. Ferracone went on to say that Infotopia intended to “vigorously defend our shareholders’ rights against this action.”
On October 18th the Company issued another release, this time disclosing that Cactus Jack’s Marketing Corporation and an individual named Jack Barringer (the Cactus Jack?) had agreed to dismiss the lawsuit in exchange for payment of $100,000 and return of the remaining Cactus Jack inventory.
It doesn’t look like Infotopia will be generating any more revenues from Cactus Jack products.
MY FAIR ROCKER
On June 20th the Company issued a press release stating that it was in the final stages of editing an infomercial, featuring actress Morgan Fairchild, for a fitness product called the “Body Rocker.” Then, on August 3rd, Infotopia issued a second release stating that the infomercial would begin to air on August 15th. The Company said it would post airtimes on its website as soon as they became publicly available. According to the Company, orders for the Body Rocker had already been received from Japan.
Neither of these press releases discussed the financial aspects of the Body Rocker. What would it cost to purchase or manufacture the product, produce the infomercial and buy air time? The Company didn’t say. In the meantime, August 15th came and went and no revenues from the Body Rocker were publicly announced.
On September 7th the Company issued another press release, this time saying that the Body Rocker infomercial had been test marketed in several regional markets and would make its national debut September 9th – in over 30 million households - on cable television’s Product Information Network (PIN).
Did the infomercial air in September 2000, and, if so, where? We checked the Infotopia website for air times, but were unable to find any listings. Instead, the website indicates that the product debuted in December 2000. This seems consistent with a January 3rd press release, which says the infomercial had been re-edited in December 2000, and released, on a limited basis, between Christmas and New Year’s.
How much has the Company spent on the Body Rocker, and what revenues has it generated? The Infotopia website says that no revenue figures are available, and while that January 3rd press release indicated that that initial demand “has been tremendous,” it provided no details of actual sales.
And how have investors responded to these press releases? On August 4th, the day after the first “air date” was announced, volume more than tripled to 6.6 million shares and prices almost doubled from a low of 9 cents the day before to highs of 17 cents. Then, on September 8th, one day after Infotopia said the infomercial would debut in 30 million households, volume was 17.8 million shares, and prices moved from lows on September 7th of 45 cents to highs of 89 cents in intraday trading the following day.
Still, investors await revenue figures.
NO WEIGHTING
On July 5th the Company announced that it was “in the final editing phase of a new infomercial targeted at the natural weight loss market.” The press release did not identify the product, describe how it would work or indicate what it might cost. Infotopia did say that this weight loss system has shown that, combined with exercise, “it can compete with the best products on the market.” Unfortunately, the Company did not indicate where, or to whom, that has been demonstrated.
Although the Company said that the new infomercial “would be launched in the next few months,” and that “a show schedule will be made available to the public as soon as it is finalized” we are unable to find any further references to that show, the infomercial, the product, or any revenues the Company has received from this “complete fat fighting system.”
NEXT OF THE RED HOT MOMMIES
On October 27th Infotopia said it had agreed to acquire four new products from Total Tiger, Inc., including a “complete body workout” device called “Total Tiger.” Other projects included a regimen for increasing energy and sex drive in young mothers (the "hot mommies ™ system”); a treatment for prostate inflammation; and a product dealing with the effects of osteoporosis. These last two products, the Company said, represented a joint venture between Infotopia, Total Tiger and the National Science Corporation of America. The Company predicted that the four products “have the potential to generate in excess of $100,000,000, over the next two years.” It did not say how the Company arrived at that figure, or provide any specific basis for that projection.
Infotopia’s website indicates that sales of the “Hot Mommies™ System were launched in December 2000, but so far the Company has not disclosed any revenues. The other products are scheduled to enter the market over the next several months.
The October 27th press release, and subsequent public disclosures, did not reveal any of the terms of the agreements between Infotopia, Total Tiger and National Science Corporation. What did Infotopia pay for the rights to market these products? How much was the Company obligated to pay in royalties or licensing fees? What level of sales would be required before the items proved profitable? Will any of the products require FDA approval? If so, has the process begun? None of these issues were addressed.
FORE AND MORE
And when those “Hot Mommies” start to age, it turns out the Company plans to sell them something else. On November 1, 2000, Infotopia revealed “the signing of six new products with the Infomercial Development Companies of San Diego California” - including a product for women facing menopause; a golf swing training device; a weight loss product; a hand-held home facial unit; a program for increasing personal income; and a skin care system.
What did Infotopia expect as a result of these new additions? Quite a lot as it turns out. The Company’s President, Ernest Zavoral declared that “if the test marketing results and the current sales momentum continues, we should be able to add $20 million in sales” for the year ending February 28, 2001. Zavoral said that “[w]hen added to the current success we are enjoying with the current stable of products including Torso Tiger our current forecast suggests that Infotopia would gross over $30 million in sales without the new revenues.” That implies revenues of $50 million for the year. Does that seem a bit ambitious – considering the Company has had revenues of $8 million for the first nine months of the year and virtually none of the new products have yet to be introduced?
And Infotopia CEO, Daniel Hoyng, added, “profit margins on this widening family of products are excellent. Fiscal 2001 (March 2000 to February of 2001) should be able to produce before tax profit margins of as much as 10%, the margins for fiscal 2002 (March 2001 to February 2002) should see before tax margins of 18.9% on projected sales of $165,068,130."
The November 1st press release indicated that some of the Company’s “newly acquired products are already on the market and producing well.” It did not say, however, which products were already being sold, or what revenues they had produced – either for Infotopia or anyone else.
The press release also did not describe the nature of the Company’s relationship with Infomercial Development Companies. Subsequent public filings indicate that Infotopia and Infomercial Development Companies entered into a joint venture agreement for the marketing of the products. These filings, however, do not describe the terms of the joint venture, what it would cost to develop and market the products , or how the venturers would split costs, revenues and profits.
Such open questions did not discourage investors, who traded over 28 million Infotopia shares between November 1st and November 3rd. During those three days, shares moved from lows of 17 cents on November 1st, to highs of 31 cents on November 2nd, before descending again to 21 cents at the close on November 3rd.
TIGER – THE SEQUEL
In September 2000 the Company announced plans to sell “Torso Tiger II,” a “scaled-down version” of the Torso Tiger. Infotopia said that Torso Tiger II would be sold through retail stores only. A September 19th press release indicated that 24,000 units of the new device had been ordered, but did not state who had placed that order, how much consumers would be charged for the product, or what profit margins could be expected. It also did not specify what the Company had paid, or agreed to pay, in order to capture rights to this product.
Has Torso Tiger II generated any income for Infotopia so far? The Company’s press releases, and its latest quarterly report, do not specify which revenues, if any, are attributable to this product.
A COME-BACK
At least one other product in the Infotopia portfolio has generated some revenues – even though it seems that most of that income was realized some time ago. On October 6th the Company said it planned to reintroduce a product called the “Backstroke Back Massager” which had generated revenues of about $5 million since February 1999. In a November 21st press release, Infotopia indicated that it anticipated “a minimum of five million in new sales from the Backstroke(R) Back Massager” over the next six to nine months.
The November 21st release states that orders for 6000 units had been received from Russia, Israel and Spain. But what did that mean for the Company? Does it owe licensing fees in connection with these sales? How did it acquire the right to market the device, and on what terms? Once again the press releases are silent on those issues.
Has the Company received any revenues from this product since its reintroduction? The latest Form 10-Q does not break down sales by product, so it is difficult to determine whether it reflects any new income from the Backstroke Back Massager.
ON A ROCKER ROLL
On December 1st Infotopia announced a “strategic alliance” with Lohan Media Productions to market the “Body By Jake Bun & Thigh Rocker.” Infotopia said that this infomercial would feature Jake Steinfeld, known for his “Body By Jake” fitness products.
The Company did not offer details of its relationship with Lohan Media, other than to say that the two entities would “co-advertise the product.” And while Infotopia projected that revenues would “equal or exceed our experience with Torso Tiger,” the press release did not say how those revenues would be shared, or what Infotopia had paid to acquire the right to “co-advertise” the product. Still, 12.9 million shares of Infotopia traded on December 1st – up from 4.6 million the previous day.
On January 5th the Company issued another press release concerning this product. This time, Infotopia said that the “Bun & Thigh Rocker” was the “Number One Ranked Infomercial in the country” based upon “frequency of infomercials airing for the week ending December 29th.” But does frequency of airings translated into sales – or profits? And isn’t it also important to know when the piece aired, and where? Isn’t ad placement a significant issue? And, were even last-minute shoppers buying fitness equipment, from infomercials, during the week that began three days before Christmas and ended just before New Year’s Eve?
No revenue figures were announced in the January 5th press release, but Infotopia predicted on January 5th that sales of this product could exceed the Torso Tiger by 200% to 300%. The Company did not say how it had arrived at that lofty prediction.
TALKING TURKEY
Then there is something called the “Cooking Saddle” that is supposed to make it possible “to effortlessly lift turkey or other meats from cooking pan to the table.” How does this device work? The Company’s Form 10-Q for the quarter ended August 31, 2000 described the product as “a fully netted cotton material that can hold up to a 40-pound turkey.” A picture on Infotopia’s web site shows a woman lifting a turkey by what would appear to be a sling attached to two strings.
The product sells for $1.95. How much of that sum represents Infotopia’s potential profit? It would appear that a high volume of sales would be necessary before the Cooking Saddle generates material revenues.
That August 31st 10-Q stated that Infotopia already had a commitment for one million units from a major retail chain. That statement is reiterated in the 10-Q for the quarter ended November 30, 2000. However, that “chain” was not identified in either of the quarterly reports and the Company has yet to report any actual sales, or revenues from the “Cooking Saddle,” either on its website or in its public filings.
Was this the same order CEO Daniel Hoyng was referring to in his October 16, 2000 letter to shareholders? That letter said that the Company had “received a commitment for an order in excess of one million pieces from a major retail chain for one of our newest products.” At that time, Hoyng stated that the product in question – which he did not identify – “is destined to be a holiday hit and provide exceptional margins of profitability to our shareholders.” The press release went on to say that the Company was “working with our manufacturers and hope to deliver the first one million units in November of this year.” Could Infotopia have been referring to a Thanksgiving debut for the Cooking Saddle?
If so, perhaps they are now planning for next Thanksgiving.
PAYING THE PRICE
Acquiring and developing products, producing infomercials and maintaining inventories requires significant resources – and, it would seem, plenty of cash. Since June 2000, Infotopia has announced plans for no fewer than fifteen new products – in addition to Torso Tiger and Torso Tiger II. Indeed, in a September 28, 2000 letter to shareholders, Infotopia CEO Daniel Hoyng acknowledged that “each new product in development requires in excess of $300,000 for the cost of the infomercial production, molds and tooling, product testing and other related miscellaneous developmental expenses.” Mr. Hoyng went on to say that “after launch the a [sic] product like the Torso Tiger can utilize between $1,000,000 for inventory and media prior to producing sales.”
With at least fifteen new products in the pipeline this would add up to about $4.5 million in pre-launch costs, and millions more for inventory. At last report, Infotopia had less than $500,000 in the bank.
That means the Company will likely be looking to raise money in the future – something it has done in the recent past. How has Infotopia obtained funding, and at what price? These are some of the questions we will be looking at in our next installment of this series on Infotopia, Inc.
http://www.stockpatrol.com/schlock/articles/infotopia2.html
INFOTOPIA, INC. (OTCBB:IFTP), PART I – IS THIS A LIMITED TIME OFFER?
January 29, 2001
Shares of Infotopia, Inc. flew off the shelves earlier this week after the Company released its financial report for the third quarter of 2000 and suggested that some mergers and acquisitions were on the horizon. Volume, which had been a healthy 8 million shares on Friday January 19th, leapt to 36 million shares on January 22nd. The following day another 32.5 million shares were traded. The Company can only hope that its products will sell at such a pace.
What caused the surge? Infotopia has been sending out a stream of press releases since early last summer announcing the introduction of new products, including something called the “Torso Tiger,” and offering revenue projections. But that has not been the only item on Infotopia’s agenda. Since September 1, 2000, the Company has issued about 137 million shares of its common stock. Now, there are around 190 million shares outstanding.
Earlier this month, on January 11th, the Company filed to register 34.7 million of those shares for sale. This was the second major Registration Statement filed by Infotopia in the last three months. Last November, the Company registered 96.8 million shares. That means Infotopia has registered more than 131 million shares for sale since November. And that does not include 51 million shares registered by Infotopia on nine separate S-8 Registration Statements between April 28, 2000 and November 9, 2000.
Making matters still more interesting, the Company’s CEO and Chairman Daniel Hoyng, its President Ernest Zavoral, and its Secretary Marek Lozowicki registered 7 million of their own shares back in November – which, according to the Registration Statement, represented all of their holdings at the time. It seems they may have received some more Infotopia stock since then. Messrs. Hoyng, Zavoral and Lozowicki registered another 3.36 million shares for themselves on the January 11th Registration Statement.
The January 11th Registration Statement was filed only days before the Company announced it was working on acquisitions that created the potential for a business “with $400,000,000 in revenue and $60,000,000 in profit.” Add to that the fact that Infotopia says it is looking to obtain NASDAQ listing – and, according to a January 24th letter from CEO Hoying to the shareholders, is exploring one scenario that could result in every stockholder receiving $10 worth of stock in a NASDAQ-listed company in exchange for every $4 of Infotopia stock. That sounds like a potentially great opportunity. Why then are so many shareholders, including members of senior management, looking to sell their shares? We decided to search for some clues in Infotopia’s statements and activities in recent months. How, we wondered, did Infotopia arrive at this juncture?
THE DOCTOR IS OUT
Infotopia was spun off as a public company in April 2000 by virtue of a reverse merger with a company called Dr. Abravenal’s Formulas, Inc. Prior to that time, Infotopia had been a wholly owned subsidiary of National Boston Medical, Inc. (NBM), which traded on the OTC Bulletin Board. A May 4, 2000 press release said that NBM had received 7,949,999 shares of Dr. Abravenal’s Formulas (55% of the outstanding stock) in exchange for 100% of Infotopia. The press release also said that Dr. Abravenal’s Formulas would assume responsibility for $2.5 million of NBM’s outstanding debt, and change its name to Infotopia.
As it turned out, NBM actually received 8,167,387 shares of stock as a result of the merger. That information, and more details, were contained in a Form 8-K filed by Infotopia on July 11, 2000 – two months after the transaction. The Form 8-K also revealed that Infotopia had current assets of about $1 million at the time of the merger, but only about $4,500 was cash. Its revenues for the nine months ended March 2000 were approximately $2.3 million, with losses of $4.5 million.
Who controlled NBM? The documents we found did not provide that information. At the time of the merger, NBM said that it planned to distribute the Infotopia shares to its stockholders. On June 9th, however, NBM announced that it was delaying the proposed distribution. Then, on August 4th, a press release announced that Infotopia had offered to repurchase 8.167 million shares of Infotopia stock from NBM at 15 cents a share utilizing “funds from the cash flows of the Torso Tiger and its equity line to facilitate the purchase.”
That transaction apparently did not come to fruition. Instead, NBM declared bankruptcy. In an August 22nd press release, NBM stated that it had filed a petition for reorganization under the United States Bankruptcy Code, claiming that Infotopia failed to “honor and otherwise assume certain obligations of NBM” which Infotopia had agreed to assume as part of the consideration for the merger. NBM also said that “management of Infotopia (some of whom were former Board members of NBM) has refused to honor its representations.” NBM did not elaborate upon those statements (or name the former Directors it had in mind), but it did promise to pursue appropriate claims against Infotopia, among others, as part of the Bankruptcy Proceeding. A June 7, 2000 press release from NBM indicated that Daniel Hoyng, Ernest Zavoral and Clinton Smith had recently resigned as NBM Directors, and that Marek Lozowicki had stepped down as an officer of NBM. All four individuals are now associated with Infotopia.
Did NBM ever distribute the Infotopia shares? Apparently not. 8.167 million shares were registered – in the name of NBM – on the Registration Statement filed by Infotopia in November 2000. Who received the proceeds from that stock sale? Did they go to NBM’s creditors? Or perhaps to the former NBM shareholders – whomever they may be?
INFOMATION PLEASE!
Since the merger, Infotopia has issued a series of press releases announcing plans to market various products through infomercials, advertisements, the World Wide Web and other media. Infomercials are long-form advertisements that sometimes seem more like actual television programs than commercials. They can be expensive – with production costs generally running between $150,000 and $250,000 and ranging as high as $1 million according to one report. And that does not include the cost of air time. One direct marketing professional has suggested that it can cost $100,000 to $500,000 per week to air a successful infomercial.
With costs like this, sales volume needs to be significant – and so do product markups. Where does that leave Infotopia? Announcing product launches and projecting revenues at a brisk pace.
HOLD THAT TIGER
So far, Infotopia’s flagship product seems to be an exercise device called “Torso Tiger.” On May 10th, the Company said it had signed a letter of intent to acquire “exclusive rights” to the Torso Tiger from Torso Tiger, Inc. According to that press release, the exercise equipment, which had debuted in February 2000, had already produced revenues of $10 million from the sale of more than 97,000 units. The Company also noted that the Torso Tiger had been rated the sixth most successful infomercial the previous month, based upon frequency of airings in the United States.
But does “frequency of airings” translate to sales, or does it simply mean that the owners of Torso Tiger had purchased the sixth greatest amount of air time? How much had it cost to air the infomercial with such frequency? Could the Company afford to sustain that level of exposure? The press release did not address those matters.
What were the terms of the “exclusive rights” agreement? How much would Infotopia have to pay for each piece of equipment, what would it charge the public, and how much was it required to remit to the developers of Torso Tiger on each sale? These questions were crucial since every required cost – production, marketing, license fees – would affect the profitability of the product. Infotopia said that Torso Tigers had been generating revenues at a rate of $800,000 to $1 million per week. But do products sold through infomercials have limited life-cycles? If so, had Torso Tiger already run a significant portion of its course before Infotopia acquired the rights?
It seems that Torso Tiger had been selling for about $100 per unit before Infotopia acquired the “exclusive rights” to market the device - 97,000 units producing $10 million in sales. Now, however, Infotopia’s web site says the Torso Tiger is selling at $68.97. That raises yet another question – how much does Infotopia pay for each Torso Tiger? In other words, what is the spread between its cost and the price charged to the public? How many Torso Tigers would Infotopia need to sell in order to make a profit? Could revenues at the rate of $800,000 to $1 million a week be maintained, and would that be sufficient to make the product profitable? If, as it seems, Torso Tiger is now being sold at a lower price, wouldn’t sales have to increase – just to keep pace?
Of course, any potential profits would also be affected by the amount Infotopia was paying to acquire the Torso Tiger rights. On June 26th, the Company announced that it had “acquired exclusive rights to market the Torso Tiger” in exchange for 10 million shares of Infotopia stock. At the time, that was almost 30% of the Company, based upon the 34 million shares outstanding on July 14, 2000.
That is not all Torso Tiger Inc. received for the “exclusive rights.” The final agreement, which was later attached to the Company’s July 24, 2000 Form 10Q, stated that Infotopia would issue Torso Tiger, Inc. (or its designees) $500,000 worth of Infotopia stock; pay weekly royalties ranging from 5% to 17% (depending on the manner and place of sale); and pay additional contingent bonuses based upon sales levels. It also required the Company to make minimum weekly “media buys,” or risk the loss of some of the Torso Tiger revenues. Has Infotopia maintained those minimum requirements? We were unable to find that information in the Company’s public filings or press releases. Even if revenues continued to run from $800,000 to $1 million per week (as Infotopia projected) how much would be left for the Company after it paid for the product, remitted these fees to Torso Tiger, Inc. , and bought the necessary air time?
According to the June 26th press release, “under the terms of the agreement, Torso Tiger's highly successful management team will continue to manage the Torso Tiger campaign and all existing contracts and agreements will remain intact.” The Company did not say what those contracts required, who they were with, or how long the obligation would last. It would be difficult, therefore, to calculate any additional costs of this project.
Despite these unanswered questions, investors were apparently intrigued. Almost 14 million shares of Infotopia stock were traded between June 26th and June 28th.
TIGER, TIGER BURNING BRIGHT
Despite these earlier statements, it was not until August 15th that the Company announced that the Torso Tiger deal had been completed. One week later, on August 22nd, the Company said that sales had commenced and, according to Chief Financial Officer, Tony Ferracone, “[t]he final figures are being tallied now, but it appears that we have done over $950,000 in revenues in one week with the Torso Tiger. In just one week we have beaten our entire first quarter.” The following week, on August 29th, Ferracone announced an additional $750,000 in sales. Investors responded again. Almost 75 million shares were traded between August 22nd and August 29th – share prices, which were around 10 cents on August 21st, hit 53 cents on August 29th ( a day that saw 21.6 million shares change hands).
From September 6th through October 4th, Infotopia issued a series of press releases announcing Torso Tiger sales exceeding $1 million a week – more than $5 million in all. A September 24th press release said that the Company had received “orders from nations all over the globe” representing “the first step toward a projected worldwide rollout that should add significantly to sales revenues of the already successful product.”
But those numbers hardly told the entire story. What was the net effect of those sales on the Company’s profitability? One press release, on October 4th, said that the Company had posted earnings of $205,000 on the previous week’s sales of Torso Tiger. But did that include consideration of related marketing costs and license fees? And how could the Company provide that figure only a week after the sales had been completed since it still had to await possible cancellations and returns? Although such question had yet to be answered, trading volume remained brisk – especially on and around those days that the Company released its revenue figures and projections.
Have revenues continued at the projected pace? In a September 28th letter to shareholders, the Company’s CEO Daniel Hoyng said that Infotopia was “forecasting sixteen million in sales [of Torso Tiger] for the balance of the year.” Less than a month later, an October 24th press release said that the Company had already “booked over $8 million in orders. But wait - on November 8th Infotopia announced that revenues through October, for units actually shipped, were approximately $6.3 million. That was about $2 million less than the Company said it had already “booked” two weeks earlier.
These various announcements raise other questions as well. October sales accounted for about $4.7 million of that $6.3 million total. That left just $1.6 million representing pre-October sales. But hadn’t the Company noted about $5 million in revenues in a series of press releases issued between September 6th and October 4th?
Have subsequent sales kept pace with October 2000? When we last checked, the Company’s website said that revenues “to date” from the Torso Tiger have been approximately $7.5 million. Could sales have dropped so precipitously? Or is the web site information just out of date?
Perhaps a better indication of revenues can be found in the Company’s Form 10-Q filing for the quarter ended November 30th. At a rate of $800,000 to $1 million per week, investors might have expected sales of Torso Tiger to have approximated $10 to $13 million for the quarter. Instead the Company reported sales – of all products – totaling about $8.6 million. That suggests sales of $2.3 million in November – about half of the October number. Do those quarterly revenues reflect sales of any other products? If so, the drop in Torso Tiger sales seems even more dramatic.
Even a robust Tiger needs help. Products - including the most successful – eventually plateau or run their course. So it should come as no surprise that Infotopia has been introducing other products to the market, and announcing even more in the pipeline. Have those projects generated any revenues for the Company? What else is on the horizon? We examine these questions, and others, in our next installment of this series on Infotopia.
http://www.stockpatrol.com/schlock/articles/infotopia.html
Just what I'm going through
I will finally know {understand} at my end.
All is an illusion and yet still very real.
The substance of which, depends much upon the foundation of the viewer.
Summary: According to a Press Release dated August 23, 2001, the complaint alleges that the plaintiffs were induced through a series of false and misleading statements made by the company's senior management between June and September 2000 to exercise warrants to purchase Infotopia stock. The stockholders exercised their warrants in mid-September by surrendering promissory notes issued by Infotopia that provided for the return of principal within 270 days together with 10% interest. The stockholders claim that they relied on statements by Hoyng and other officers and directors that the Torso Tiger sales will continue for many years to come and that earnings of 20 cents per share could be safely projected for this fiscal year. In fact, according to the complaint, Infotopia discontinued the sale of this product as of December 31, 2000 and the company reported a loss of over $16 million dollars for the three months ending November 30, 2000 and a loss of over $26 million for the ten months ended December 31, 2000. Other false and misleading statements alleged in the complaint relate to an announced Letter of Agreement for a $20 million financing package that was characterized in an August 4, 2000 press release as a real home run for our company. In a letter to the shareholders on September 28, 2000 Hoyng disclosed that the Letter of Agreement was in fact only a letter of intent that never materialized into any financing for Infotopia. The stockholders further assert that the false and misleading statements had the effect of causing the stock price to rise from 12 cents per share on August 23, 2000 to $1.12 per share on September 12, 2000. Several of the insiders sold hundreds of thousands of shares through September 20 realizing substantial profits. The suing stockholders' stock was not registered by the company until over a month later when the stock price had dropped to the 20 cent per share range. Adjusted for a recent 200:1 reverse split, the stock is currently trading at less than a half a cent per share.
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INDUSTRY CLASSIFICATION:
SIC Code: 2833
Sector: Consumer Cyclical
Industry: Recreational Products
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COMPANY/ISSUER NAME: Infotopia, Inc.
COMPANY/ISSUER TICKER: IFTA
COMPANY WEBSITE: http://www.infotopia.com
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FIRST IDENTIFIED COMPLAINT IN THE DATABASE
Anelle, et al. v. Infotopia, Inc., et al.
COURT: N.D. Ohio DOCKET NUMBER:
JUDGE NAME:
DATE FILED: 08/23/2001 SOURCE: Business Wires
CLASS PERIOD START: 06/01/2000 CLASS PERIOD END: 09/29/2000
TYPE OF COMPLAINT: Unamended/Unconsolidated
PLAINTIFF FIRMS IN THIS OR SIMILAR CASE:
Goodkind Labaton Rudoff & Sucharow LLP
100 Park Avenue, New York, NY, 10017
(voice) 212.907.0700, (fax) 212.818.0477, info@glrslaw.com
Hahn, Loeser & Parks
1050 Fifth Third Center 21 East State Street, Columbus, OH, 43215-4224
(voice) 614.221.0240, (fax) 614.221.5909,
_____________________________________________
TOTAL NUMBER OF PLAINTIFF FIRMS: 2
DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Class Action Complaint
Type: Complaint Date on the document: 08/23/2001
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http://securities.stanford.edu/1020/IFTA01/
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Ey, Yi, Yi! To be continued when I have more time to process information. ( o)(o )
By now you may be thinking that this series of articles is longer than a typical prospectus. In our first two installments we began our look at prospectuses, and the signals they send (BUYER BE WARY – BETWEEN THE LINES, PART I and BETWEEN THE LINES, PART II).
In this installment we take a look at the Company, the people who run and control it, and money, money, money!
The Company (a/k/a The Business)
Obviously, this section will differ significantly from deal to deal. Every description of the company will, however, have certain common elements. Look at the Company’s history. Has it successfully developed its business before the public offering or is it a "start-up?" Does it face stiff competition, and are its competitors well known, more established and better financed? Once you have reviewed the business section, sit back and decide why you would rather invest in this Company than in one of its competitors. Does it have fresher ideas? Superstar managers who have demonstrated an ability to excel and innovate? If not, you may want to look at the competition instead.
This section will also tell you whether the Company has more than just a good idea. How many employees are there, and what functions do they perform? Does the Company rent its operating facilities, or does it own property? In short, is the Company in a position to fulfill its plans. If it doesn’t have the facilities, plants, offices or personnel, the business may be a lot farther from profitability than you have been led to believe.
Which leads us to another concern. Is the broker suggesting that there is information about the Company that is not included in the prospectus? Or that is inconsistent with the prospectus? If a broker ever suggests this, or tells you to just ignore the prospectus, hang up the phone, forget about the investment and call the regulators. When you hear that kind of sales pitch you can be sure that somethin’s rotten on Wall Street.
Management
A good idea can be a potential goldmine. Just look at the slew of hi-tech companies that trade at multiples that can double for zipcodes. But even the best laid plans can go awry without sound management. The management section will tell you who is running the Company. How experienced are the people calling the shots? Do they have a background in the industry? Have they been successful? And are they replaceable? Is the Company built around one "superstar?" If it is, the Company, and with it your investment, could be one banana peel away from oblivion.
If the people in charge seem capable, are they locked into long term contracts? How much do they get paid? Can they be fired if they don’t perform? If so, what will it cost the Company? Some employment agreements provide generous compensation packages for severed employees and can pose a financial burden for the Company.
Do the Company’s executives own stock and do they have stock options? In short, do they have a financial interest in the company’s success? Options can keep good personnel at the Company, particularly if they are contingent on continued employment. Consider also whether the options are tied to the Company’s success. If they are, they provide an additional incentive for management to perform well.
And remember. Running a public company is far different from operating a private enterprise. Has management had experience in the public sector? Or will they be learning on the job, and on your investment?
Then look at the directors. What are their backgrounds? There is some comfort in knowing that some of the company’s directors have served on Boards of Directors before, have a background in, and understanding of, the Company’s business, or work in related areas that supplement or support the company’s operations. It is also important for a Company to have a sufficient number of "independent" directors who are not involved in the Company’s day-to-day management. Independent directors can be more objective when it comes to making hard decisions about the Company’s future.
Principal Stockholders
The Company’s principal stockholders may include its founders, promoters, senior management, lenders and venture capitalists who provided the company with its earlier funding. As a potential investor you want to know how each of these individuals (and entities) received their shares. What did they pay, and how long have they held their stock positions?
The stockholdings of every officer, director and 10% stockholder must be included in the prospectus. Once you see who holds the largest number of shares you will be able to develop a pretty good idea of who controls the company. Does management own a majority of the shares, or are they in the hands of a group of outside investors? Are the outside investors individual investors, whose names and backgrounds are provided? Or are they nondescript offshore corporations, identified only by their attorneys, agents and post office boxes. Remember, as a rule of thumb, professional investors are likely to be interested in seeing their shares increase in value, and then disposing of them. Are these stockholders registering their shares as part of the public offering? If so, you may be justifiably concerned that they are more interested in the short term price of the stock than the long term prospects of the Company. On the other hand, if members of management are large shareholders, and are not selling immediately, it may be reasonable to conclude that their priority is building the company
Use of Proceeds
The Use of Proceeds section tells investors just how the Company plans to use the offering proceeds. This is vital information. As you review this section consider whether it contains sufficient details about the planned spending. Will the funds be used to grow the business? Does the Company plans to spend the bulk of its proceeds developing its operations; building plants, expanding product lines or producing products? Will these expenditures result in immediate, or at least foreseeable, revenues? Some expenditures predictably will not. Spending on research and development may be necessary, but it is far more speculative and the results (and therefore the company’s prospects) are often far from certain.
Consider this also. Does the Company plan to use any of the proceeds to pay outstanding debts? Will that leave the company with sufficient funds to execute its business plan?
And finally, is the Use of Proceeds section just an illusion? Has the Company reserved the right to allocate the proceeds differently? If it has do you, as an investor, feel comfortable relying upon management’s judgment – or would you prefer to invest in a company that is committed to spending the offering proceeds in the way the Prospectus specifies.
Financial Statements
These appear at the end of the Prospectus, after your eyes are bleary, your mind is weary and your thoughts are drifting to something else. (Selected financial information may also appear throughout the Prospectus, in various tables as well as in the Management’s Discussion and Analysis).
Read the financials with care, and pay attention to the auditor’s footnotes, because these will explain significant entries on the balance sheets. The financial statements will reveal whether the company has suffered losses, and whether those losses have occurred from year to year. They will reveal the extent and nature of the Company’s assets. Are those assets tangible or intangible? Does the Company have cash and cash equivalents, or are its assets inflated by licenses, patents, goodwill and other intangible items? Are revenues consistent? Have there been any unusual expenses? Are salaries and expenses proportionate to revenues or are they excessive? Each of these factors should be carefully considered. It may seem simplistic, but from a financial standpoint the past is often prelude to the future.
As you can see, there is a wealth of information to consider and review in any prospectus. Hopefully, we have given you a starting point. The burden, however, is on you, the individual investor, to protect yourself by reading, reviewing and asking questions. As always, you, buyer, should be wary.
http://www.stockpatrol.com/buyer/articles/prospectus3.html
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IFTA -- Infotopia, Inc.
Com ($0.001)
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There are no financial reports available for this company.
http://www.pinksheets.com/quote/finance.jsp?symbol=IFTA
IFTA -- Infotopia, Inc.
Com ($0.001)
This service is not available at this time.
http://www.pinksheets.com/quote/filings.jsp?symbol=IFTA
IFTA -- Infotopia, Inc. (NV)
Com ($0.001)
Address:
3635 Boardman Canfield Rd.
Canfield
OH 44406
USA
Phone: 330-702-3777
Company Website: http://www.infotopia.tv
Officers:
Dan Hoyng, CEO; Jane Aggers, COO; Gregory Kofford, CFO
Shares Outstanding: 62,995,000 as of 2002-01-15
Estimated Market Cap: 6,300 as of 2004-01-09
Current Capital Change:
shs decreased by 1 for 200 split
Ex-Date:
Record Date:
Pay Date: 2001-06-22
Dividends: None
State of Incorporation: NV
Company Notes:
Note=8-99 company is in the development stage, formed as a nutritional supplement development and marketing corporation
Formerly=Dr. Abravanel's Formulas, Inc. until 4-00
Transfer Agents:
Continental Stock Transfer & Trust Company, New York, NY 10004
http://www.pinksheets.com/quote/company_profile.jsp?symbol=IFTA
IFTA -- Infotopia, Inc.
Com ($0.001)
There is no news available for this security.
http://www.pinksheets.com/quote/news.jsp?symbol=IFTA
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